Nationalization of Banks for implementing Government policies :
The history of nationalization of Indian banks dates back to the year 1955 when the Imperial Bank of India was nationalized and re-christened as State Bank of India (under the SBI Act, 1955). Later, in July1960, the subsidiaries of SBI (Associates) were also nationalized.
On July 19, 1969 the Government of India issued an ordinance and nationalized 14 major commercial Banks. This was considered as a major revolution in the Indian banking system.
1. Allahabad Bank
2. Bank of Baroda
3. Bank of India
4. Bank of Maharashtra
5. Canara Bank
6. Central Bank of India
7. Dena Bank
8. Indian Bank
9. Indian Overseas Bank
10. Punjab National Bank
11. Syndicate Bank
12. Union Bank of India
13. United Bank of India
14. United Commercial Bank (now known as UCO bank)
In 1980, six other commercial banks with deposits of above ` 200 crores were nationalized :
1. Andhra Bank
2. Corporation Bank
3. New Bank of India
4. Punjab and Sind Bank
5. Oriental Bank of Commerce
6. Vijaya Bank
Later on the New Bank of India was merged with Punjab Nationalized Bank.
The nationalization of banks resulted in rapid branch expansion which led to many fold increase in the number of commercial bank branches in Metro, Urban, Semi – Urban and Rural Areas. The branch network assisted banks in mobilizing deposits and accelerated economic activities on account of priority sector lending.
The purpose of nationalization was:
(a) to increase the presence of banks across the nation.
(b) to provide banking services to different segments of the Society.
(c) to change the concept of class banking into mass banking, and
(d) to support priority sector lending and growth.